Business Use of a Personal Vehicle: Mileage Log Requirements, Standard Rate vs. Actual Expenses
Vehicle expenses are one of the most commonly claimed (and most commonly audited) business deductions. The IRS provides two methods for calculating the deduction for business use of a vehicle: the standard mileage rate (70 cents per mile for 2025) under Rev. Proc. 2019-46 (updated annually), or the actual expense method under IRC 162. Both methods require the same foundational documentation: a contemporaneous mileage log that records every business trip with the date, destination, business purpose, and miles driven. Under IRC 274(d), vehicle expenses are subject to strict substantiation requirements, and the Cohan rule (estimating expenses when records are incomplete) does not apply. Without a compliant mileage log, the IRS will disallow the entire vehicle deduction, even if the business use is genuine. Commuting (driving from home to your regular place of business) is always a personal expense and is never deductible.
Standard mileage rate vs. actual expenses:
| Feature | Standard Mileage Rate | Actual Expenses |
|---|---|---|
| 2025 rate | 70 cents per mile | N/A (track actual costs) |
| What it covers | Gas, oil, insurance, repairs, depreciation, lease payments | Must track each expense separately |
| Simplicity | Simple (just track miles) | Complex (track all costs + business-use %) |
| Parking and tolls | Deductible IN ADDITION to mileage rate | Deductible in addition to actual expenses |
| Depreciation | Built into the mileage rate | Calculated separately (MACRS, Section 179, or bonus depreciation) |
| When to use standard rate | Must be used in the first year the vehicle is placed in service for business (if choosing this method) | Can switch from standard to actual (but not back for same vehicle) |
| Restrictions | Can’t use for more than 5 vehicles simultaneously; cannot use if you claimed Section 179 or MACRS depreciation on the vehicle |
Mileage log requirements (IRC 274(d)):
| Required Element | Example |
|---|---|
| Date of trip | ”March 15, 2025” |
| Destination (or area of travel) | “Client office, 123 Main St, Tampa FL” |
| Business purpose | ”Meeting with Client A to review Q1 financials” |
| Miles driven | ”32 miles round trip” |
| Total miles for the year (business + personal) | Needed to calculate business-use percentage |
What isn’t deductible (commuting):
| Trip | Deductible? |
|---|---|
| Home to regular office | No (commuting) |
| Regular office to client site | Yes (business) |
| Home to client site (no regular office) | Yes (business, if home office qualifies as principal place of business) |
| Home to temporary work location | Yes (if location is expected to last less than 1 year) |
| Regular office to second regular office | Yes (between work locations) |
Which vehicle deduction method saves you more?
Should I use the standard mileage rate or actual expenses?
The standard mileage rate is simpler and often better for newer vehicles with low operating costs. The actual expense method (gas, insurance, repairs, depreciation) is typically better for older or expensive-to-operate vehicles and for heavy trucks not subject to the luxury auto limits under IRC 280F. You must choose the standard rate in the first year you use the vehicle for business; if you start with actual expenses, you can never switch to the standard rate for that vehicle. For most owners driving 10,000-20,000 business miles, the standard rate produces $7,000-$14,000 in deductions with minimal recordkeeping.
What records do I need for the vehicle deduction?
The IRS requires a contemporaneous mileage log for every vehicle deduction, whether you use the standard rate or actual expenses. The log must record the date, destination, business purpose, and miles driven for each business trip. Commuting from home to a regular office does NOT count as business mileage, but driving between business locations, to temporary work sites, or to client appointments does. Apps like MileIQ or Everlance automate tracking. Without a log, the entire vehicle deduction can be disallowed on audit regardless of how many miles were actually driven for business. Bank and credit card records for gas alone do not satisfy the substantiation requirements.
Related guides:
Should you use the standard mileage rate or actual expenses for vehicle deductions?
The standard mileage rate for 2025 is 70 cents per mile, and you simply multiply your business miles by this rate to calculate the deduction without tracking individual expenses. The actual expense method requires tracking all vehicle costs (gas, insurance, repairs, depreciation, registration, lease payments) and multiplying the total by your business-use percentage. You must choose the standard mileage rate in the first year you use a vehicle for business; if you start with actual expenses, you can never switch to the standard rate for that vehicle. The actual expense method typically produces a larger deduction for expensive vehicles with high operating costs, while the standard mileage rate favors high-mileage drivers with fuel-efficient vehicles, so compare both methods in year one before committing.
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Yarik Yarosh, CPA. "Business Use of a Personal Vehicle: Mileage Log Requirements, Standard Rate vs. Actual Expenses." Blue Cloud CPA, September 5, 2026. https://bluecloudcpa.com/guides/small-business-business-use-of-personal-vehicle-mileage-log
This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.